Income
March 2, 2010 | 20,00 EUR | answered by Dipl.BW/SB Ulrich Stiller
Hello,
I am interested in the "connecting point" of taxes and insurance, i.e. what needs to be taxed, also in relation to the start-up grant.
VAT, income tax, pension insurance, and health insurance, no trade tax.
Example: Start of business on 1.2.2010
Expected income without VAT in the year: €7000
Start-up grant in the year: €7000 (monthly unemployment benefits + €300)
1. If I waive the small business regulation, do I have to pay the VAT for the €7000? The start-up grant does not need to be taxed, right?
2. Regarding income tax: the profit should be taxed. So no tax on the collected VAT? In the income tax return, do I need to state income and total revenue? So, I will state the net amount without VAT? Does the start-up grant count as other income? In full amount?
3. Concerning the contribution assessment for health and pension insurance: Do I also not need to mention the VAT here? The contribution is based on the income, before deducting income tax, including the start-up grant in full amount?
Thank you.
Dear inquirer,
Thank you for your inquiry, which I would like to answer based on your information and in the context of your efforts in a first consultation as follows:
If you waive the application of the small business regulation of § 19 UStG, you must deduct the sales tax from the 7,000 euros, which is 1,117.65 euros. From this amount, you can then deduct the input tax amounts from supplies and services according to the invoices provided for your business. Caution: If you waive the non-application of the small business regulation, you will be bound for the next 5 years!
The start-up grant is tax-free, so it does not increase the profit.
The difference between business income and business expenses is subject to income tax. You must declare the gross income as business income. The VAT to be paid reduces the profit as a business expense in the year of payment.
The start-up grant also does not count as other income, it is completely tax-free.
For the calculation of health and pension insurance amounts, the income is used as a basis. Income is the difference between business income and business expenses. You cannot deduct income tax, as it is a private tax and not a business expense.
I hope I could be of assistance.
Best regards
Ulrich Stiller
Tax advisor
